Here I have discussed about industrial relation, some basics, impact and other details related to economy. I hope it will give you an overall idea .

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ROLE OF INDUSTRIAL RELATION IN INDIAN ECONOMY
Industrial Relation is a multidisciplinary field. It is basically oriented towards organization's
harmony and wellbeing. Here four actors generally play major role. They are:-
a. Employer
b. Employee
c. Trade Union
d. Government ( Both Central & State Govt.)
It basically talks about employment relationship. It is dynamic in nature . It is more socio-
cultural oriented.
According to Armstrong :- IR is defined as the "It is concerned with the systems and
procedures used by unions and employers to determine the reward for effort and other
conditions of employment, to protect the interests of the employed and their employers and to
regulate the ways in which employers treat their employees”.
In the opinion of V. B. Singh “Industrial relations are an integral aspect of social relations
arising out of employer-employee interaction in modern industries which are regulated by the
State in varying degrees, in conjunction with organised social forces and influenced by the
existing institutions. This involves a study of the State, the legal system, and the workers’ and
employers’ organizations at the institutional level; and of the patterns of industrial
organisation (including management), capital structure (including technology), compensation
of the labour force, and a study of market forces all at the economic level”.
Encyclopaedia Britannica defined IR more elaborately as “The concept of industrial
relations has been extended to denote the relations of the state with employers, workers,
and other organisations".
As a whole, IR includes individual relations and joint consultation between employers and
workers at their workplace, collective relationship between employers and trade unions and
an important part played by the govt. in regulating these relationships.
If we are considering the two sides of Industrial Relation like two sides of a coin , then the
two sides are:- a. Conflict & b. Cooperation
Productivity hampers when conflict arises between employees and employer. Organization
sees slow down in work , economic loss, financial loss and many more. At the extreme cases,
strikes occur and if it will not be handled properly in time then lock out occur which are seen
in many scenarios in the developing countries like India.
Conflict not only makes an adverse impact upon organization but also it has tremendous
impact on the country's economic growth.

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Whereas Cooperation always welcome by organizations . Because it will always create win-
win situation for both the employees and employers. Production will run at a full pace.
Employees are happy by getting incentives, bonus and payment on time. Employers are
happy because the factory is running at full pace. Organization is meeting its client's demands
on time.
Scope of Industrial Relation:-
1. Labour relations, i.e., relations between labour union and management.
2. Employer-employee relations i.e. relations between management and employees.
3. The role of various parties’ viz., employers, employees, and state in maintaining industrial
relations.
4. The mechanism of handling conflicts between employers and employees, in case conflicts
arise.
Major Aspects of Industrial Relation:-
1. Promotion and development of healthy labour — management relations.
2. Maintenance of industrial peace and avoidance of industrial strife.
3. Development and growth of industrial democracy.
Objectives of Industrial Relation:-
1.Establish and foster sound relationship between workers and management by safeguarding
their interests.
2. Avoid industrial conflicts and strikes by developing mutuality among the interests of
concerned parties.
3. Keep, as far as possible, strikes, lockouts and gheraos at bay by enhancing the economic
status of workers.
4. Provide an opportunity to the workers to participate in management and decision making
process.
5. Raise productivity in the organisation to curb the employee turnover and absenteeism.
6. Avoid unnecessary interference of the government, as far as possible and practicable, in
the matters of relationship between workers and management.
7. Establish and nurse industrial democracy based on labour partnership in the sharing of
profits and of managerial decisions.
8. Socialise industrial activity by involving the government participation as an employer.
According to Krikaldy, industrial relations in a country are influenced, to a large extent, by
the form of the political government it has. Therefore, the objectives of industrial relations
are likely to change with change in the political government across the countries.
Kirkaldy has identified four objectives of industrial relations as listed below:
1. Improvement of economic conditions of workers.
2. State control over industrial undertakings with a view to regulating production and
promoting harmonious industrial relations.
3. Socialisation and rationalisation of industries by making the state itself a major employer.
4. Vesting of a proprietary interest of the workers in the industries in which they are
employed.

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Significance ofIndustrial Relation:-
The healthy industrial relations are key to the progress and success. Their significance are
discussed below :-
a. Uninterrupted production – The most important benefit of industrial relations is that this
ensures continuity of production. This means, continuous employment for all from manager
to workers. The resources are fully utilized, resulting in the maximum possible production.
There is uninterrupted flow of income for all. Smooth running of an industry is of vital
importance for several other industries; to other industries if the products are intermediaries
or inputs; to exporters if these are export goods; to consumers and workers, if these are goods
of mass consumption.
b. Reduction in Industrial Disputes – Good industrial relations reduce the industrial disputes.
Disputes are reflections of the failure of basic human urges or motivations to secure adequate
satisfaction or expression which are fully cured by good industrial relations. Strikes, lockouts,
go-slow tactics, gherao and grievances are some of the reflections of industrial unrest which
do not spring up in an atmosphere of industrial peace. It helps promoting co-operation and
increasing production.
c. High morale – Good industrial relations improve the morale of the employees. Employees
work with great zeal with the feeling in mind that the interest of employer and employees is
one and the same, i.e. to increase production. Every worker feels that he is a co-owner of the
gains of industry. The employer in his turn must realize that the gains of industry are not for
him along but they should be shared equally and generously with his workers. In other words,
complete unity of thought and action is the main achievement of industrial peace. It increases
the place of workers in the society and their ego is satisfied. It naturally affects production
because mighty co-operative efforts alone can produce great results.
d. Mental Revolution – The main object of industrial relation is a complete mental revolution
of workers and employees. The industrial peace lies ultimately in a transformed outlook on
the part of both. It is the business of leadership in the ranks of workers, employees and
Government to work out a new relationship in consonance with a spirit of true democracy.
Both should think themselves as partners of the industry and the role of workers in such a
partnership should be recognized. On the other hand, workers must recognize employer’s
authority. It will naturally have impact on production because they recognize the interest of
each other.
e. Reduced Wastage – Good industrial relations are maintained on the basis of cooperation
and recognition of each other. It will help increase production. Wastages of man, material and
machines are reduced to the minimum and thus national interest is protected.
Thus, it is evident that good industrial relations is the basis of higher production with
minimum cost and higher profits. It also results in increased efficiency of workers. New and
new projects may be introduced for the welfare of the workers and to promote the morale of
the people at work. An economy organized for planned production and distribution, aiming at
the realization of social justice and welfare of the massage can function effectively only in an
atmosphere of industrial peace. If the twin objectives of rapid national development and

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increased social justice are to be achieved, there must be harmonious relationship between
management and workmen.
Evolution of Industrial Relation in India:-
In India the industrial relations have been seen through the following three stages:
1. Occupations in India
a. Labour in medieval India
b. Guilds and union.
2. Industrial Relations in India
a. Early British Rule
b. 1st World War to Pre-Independence Period
c. Post independence period.
Let us now discuss about the post independence era :-
Post Independence Era: Immediately after independence, in the interests of the national
economy, it was considered necessary to put a stop to strikes and lockouts that interrupted
production. A tripartite conference was adopted, giving paramount importance to the
maintenance of industrial peace. The minimum wages act, the factories act and Employees
State insurance Act were all enacted 1948. Post independence industrial relations were very
much influenced by the pre-independence industrial environments and labour management
relations. Industrial unrest and shattered worker management relations prevailed everywhere
when India became independent in 1947. Government has emerged as an arbitrator between
management and workers. During the second five year plan, certain norms, mechanisms and
practices were evolved which formulate the need of minimum wage, wage boards, guidelines
on rationalization, code of discipline, code of conduct, scheme for workers participation in
management.
Causes and Effects of Poor Industrial Relation :-
The main cause or source of poor industrial relations resulting in inefficiency and labour unrest is
mental laziness on the part of both management and labour. Management is not sufficiently
concerned to ascertain the causes of inefficiency and unrest following the laissez-faire policy, until it is
faced with strikes and more serious unrest. Even with regard to methods of work, management does
not bother to devise the best method but leaves it mainly to the subordinates to work it out for
themselves. Contempt on the part of the employers towards the workers is another major cause.
However, the following are briefly the causes of poor industrial relations:
i. Mental inertiaonthe part of managementandlabour;
ii. An intolerantattitudeof contemptof contempttowardsthe workersonthe partof
management.
iii. Inadequate fixationof wage orwage structure;
iv. Unhealthyworkingconditions;
v. Indiscipline;
vi. Lack of humanrelationsskill onthe partof supervisorsandothermanagers;
vii. Desire onthe part of the workersforhigherbonusor DA andthe correspondingdesire of
the employerstogive aslittle aspossible;
viii. Inappropriate introductionof automationwithoutprovidingthe rightclimate;
ix. Undulyheavyworkloads;

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x. Inadequate welfare facilities;
xi. Dispute onsharingthe gainsof productivity;
xii. Unfairlabourpractices,like victimizationandundue dismissal;
xiii. Retrenchment,dismissalsandlock-outsonthe partof managementandstrikesonthe part
of the workers;
xiv. Inter-unionrivalries;and
xv. General economicandpolitical environment,suchasrisingprices,strikesbyothers,and
general indisciplinehavingtheireffectonthe employees’attitudes.
Effects of Bad Industrial Relations
Industrial relations are of great importance in industrial life. These relations have great
bearing on the economic, social and political spheres of our society. If in an organisation,
relations between labour and management are cordial, there will be industrial peace and
interests of both the parties will be automatically safeguarded. However, organisations where
industrial relations are strained, the organisations have to face lot of problems. The
atmosphere of such organisations is always surcharged with industrial unrest leading either to
strikes or lockouts. Organisations which ignore the importance of industrial relations face
high cost of production. Adverse effect on efficiency, low-grade production, negligence in
the execution of work, absenteeism among the workers, high rate of labour turn-over etc. are
the evils that result from poor industrial relations.
Lack of cordiality in industrial relations not only adversely affects the interests of the
labourers and employers but also cause harm to different sections of society. They are faced
with lot of difficulties and problems.
Demerits of bad industrial relations can be expressed as under:
 Effect on Workers:
 (i) Loss of wages,
 (ii) Physical injury or death on account of violence during labour unrest,
 (iii) Excesses by employers,
 (iv) Economic losses,
 (v) Bitterness in relations,
 (vi) Adverse affect on career.
 Effect on Employers / Industrialists:
 (i) Less production,
 (ii) Less Profit,
 (iii) Bad affect on organisation,
 (iv) Bad effect on human relations,
 (v) Damage to machines and equipments,
 (vi) Adverse effect on development of companies,
 (vii) Burden of fixed expenses.
 Effect on Government:
 (i) Loss of revenue (less recovery of income tax. sales tax, etc.)
 (ii) Lack of order in society,
 (iii) Blame by different parties.

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 Effect on Consumers:
 (i) Rise in prices,
 (ii) Scarcity of goods,
 (iii) Bad affect on quality of goods.
 Other Effects:
 (i) Adverse affect on International Trade (Fall in exports and rise in imports),
 (ii) Hindrance in Economic Development of the country,
 (iii) Uncertainty in economy.
CONCLUSION :-
It can be said that almost all sections of the society suffer loss in one way or the other due to bad
industrial relations. In order to maintain peace in industrial units it is of utmost importance that
employers and workers should make constant endeavour to establish cordial human relations.
Prepared By:-
SatyaPrakashMohapatra
Founder-HR Crossroads,Freelancer
CertifiedHR Generalist,APassionateHR Professional
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